On 31 October 2017, Carr J sanctioned a scheme of arrangement pursuant to Part 26 CA 2006 by which The City Pub Company (East) plc (East) acquired the entire issued and to be issued share capital of The City Pub Company (West) plc (West).
Before the scheme took effect, East and West had mirror shareholder registers. East and West were companies within the Enterprise Investment Scheme (EIS). The EIS qualifying period having expired on 14 October 2017, the directors wished to merge the companies with a view to seeking an AIM listing.
West had three classes of shares (ordinary, B ordinary and preference). The consideration received by the scheme shareholders was a single East share of the same class (and with the same rights) as the share held in West.
The proposal was unanimously recommended by the directors of West and was one of the rare schemes that received unanimous shareholder approval at the court-convened meeting. The turnout at the meeting was 63.6% in number and 75.4% in value.
Did the fact that there were different classes of share mean the scheme shareholders could not be a single class?
In line with the decision of the court in cases such as Re Oxford Immunotec Ltd (unreported, David Richards J) 1 October 2013 and Re R K Harrison Holdings Ltd (unreported, Hildyard J) 27 April 2015, Carr J accepted a single class analysis on the basis that, while various different classes of share in West were being taken into the scheme, each scheme shareholder was receiving a share of an identical class with identical rights in East. Accordingly, as they all had the same decision to make, namely whether to swap, for example, an ordinary share in West for an ordinary share in East, it was not impossible for them to consider the scheme together as a single class.